Anyone looking for a strong shot of unvarnished reality should look no further than Patrick Bet-David. The California-based financial services adviser is to romantic notions -- like home ownership and dating -- as sunshine is to fog.
His outlook may be just what America needs.
"I was sold an American dream," said Bet-David, who immigrated with his family from Iran in 1990. "What I saw as an immigrant was a place we could have freedom of religion and run a business in a free market, with free enterprise."
At age 34, Bet-David owns The PHP Agency, a financial services firm he founded four years ago. Today, it has 30 employees and 200 full-time independent contractors nationwide. Bet-David does very well.
He also rents his home.
"My employees come over and wonder, 'Why does our CEO rent his house?'" he said.
Bet-David rents because he's following his own financial rules. One of those rules is: Just because you have the money, doesn't mean you should buy a house.
His wife of nearly five years knew early in their courtship that owning a home was not going to be part of the plan for a long time. That discovery occurred shortly after their second date. They went to church, then to breakfast, then to a bookstore where he bought her a book: "101 Questions to Ask Before You Get Engaged."
Talk about cutting to the chase.
"I figured, I liked her, she liked me, so let's flush out any problems before some deal breaker comes up a year from now," he said.
His no-nonsense approach to courtship applies to home buying, too: Logic first, emotion second.
"I've worked with thousands of families struggling to make house payments, which leads to arguments, all because they bought a house prematurely, and spent too much," said Bet-David, who wanted no part of that.
Lately I've been hankering to buy a home again, so I thought I'd call Bet-David for a reality check. For the first time in more than two decades I am not living in a home I own. However, I do own a home in another state, which I rent out, making me both landlord and tenant -- as well as crazy.
"While I like having the flexibility of not being tied to a house," I tell Bet-David, "being a tenant just isn't the same as owning. I want to paint my way, add built-ins and moldings, put up window treatments, plant a garden, have a dog, get to know the neighbors, nest."
He's heard it all before.
"What you're doing -- owning a home you rent out and renting where you live -- is perfect right now," he said. "You get the benefits of a rising market, but can be nimble.
"What you're doing has a lot to do with the phase of life you're in. Your kids are taking off. Your career is blooming. You're charting a new course.
"You've built houses from the ground up," he continued. "You've bought and sold. Been landlord and tenant. You know about the different phases and stages of life and houses. I want to teach other people to do what you've done."
At this point, I couldn't talk for laughing.
"I work with a lot of millennials just getting started," Bet-David said. "They think buying a house is the next thing to do. But they saw what happened to their parents."
"Please tell me they learned something from the spend, extend, pretend era," I said.
"My message isn't don't buy a home," he said. "My message is the American dream is not home ownership. The American dream is freedom."
"I want both," I said.
Bet-David is about to have both. In four months, he and his wife and their two sons, ages 20 months and three weeks, are moving from their rental home to a house they're buying.
But he followed his own home-buying rules, which are these:
- Don't buy unless you have more than 12 months of house payments saved. He helped me with the math: Say you buy a house for $350,000 and put 10 percent down, depending on your loan, you will probably have a $315,000 mortgage, which will cost about $1,800 a month or $22,000 a year in mortgage payments. Add $3,000 for property taxes and more for insurance and association fees, so you should have $25,000 to $30,000 in the bank after closing.
- Don't buy if you're not going to live in the area for 10 years. Do your due diligence. (Bet-David has been considering the Dallas area for two years.) Consider your work, the community, nearby family, schools and neighborhood.
- Don't buy if you're a newlywed. "Wait two years," he said. "In addition to being a couple, you are business partners. It could take a while for you to learn how your partner manages finances. If one is spending out of control, you don't want to take on a mortgage. First learn how disciplined they are."
- Don't buy too much house. Whatever price home you can afford, force yourself to go 10 percent to 20 percent cheaper. Brokers might try to convince you to buy as much house as you can qualify for. Resist.
- Don't buy a house to keep up with your friends. Even if you and your friends have the same household income, and they buy a house for a certain amount, you don't know if their parents helped with the down payment, or what their debt is, or if they're going to be over extended, he said. Deal with the cards you were dealt. Buy within your means, not someone else's.
Original article on NOLA.com